CMS expects its Medicare Drug Price Negotiation Program to reduce healthcare costs by $7.5 billion in 2026.
Five things to know:
1. Between Jan. 1 and Dec. 31, 2023, about 8.8 million of the 54 million people with Medicare Part D coverage were provided drugs to treat various conditions, including cardiovascular disease, diabetes, autoimmune diseases and cancer.
2. Selected drugs in the program comprised $56.2 billion in total Part D gross covered prescription drug costs, or about 20% of total Part D gross covered prescription drug costs for 2023. During the same 12-month period, people with Medicare Part D prescription drug coverage spent $18.9 billion in out-of-pocket costs for all drugs covered under Part D, including $3.9 billion out-of-pocket for the drugs selected for negotiation, according to CMS.
3. If the drug prices agreed to between CMS and pharmaceutical companies under the program were in effect in 2023, it would have saved the federal government about $6 billion in net covered prescription drug costs, representing a 22% lower net spend in aggregate.
4. When the negotiated prices take effect in 2026, those enrolled in Medicare prescription drug coverage would save an estimated $1.5 billion, according to the agency. These savings will be in addition to savings from other provisions in the Inflation Reduction Act, including the cap on out-of-pocket drug costs Medicare beneficiaries.
5. Medicare is the largest buyer of prescription drugs in the U.S., and those drugs account for more than one in four healthcare dollars the agency spends, according to a recent study published in JAMA Health Forum. Researchers found that the drug negotiation program would have saved the government $26.5 billion, or 5% of estimated net Medicare drug spending, from 2018 to 2020.
Click here for more details on the program.